Wednesday, July 13, 2016

Corus Entertainment Announces Fiscal 2016 Third Quarter Results

Corus Entertainment Announces Fiscal 2016 Third Quarter Results

-- Closed the acquisition of Shaw Media Inc. on April 1, 2016
-- Consolidated revenues up 78% for the quarter and 27% for the
year-to-date
-- Consolidated segment profit((1)) up 90% for the quarter and 38% (31%
adjusted((1)(2))) for the year-to-date
-- Net loss attributable to shareholders of $15.8 million ($0.10 loss per
share basic) for the quarter and net income attributable to shareholders
of $127.8 million ($1.16 earnings per share basic) for the year-to-date
-- Adjusted basic earnings per share((1)(2)) of $0.34 per share for the
quarter and $1.05 per share for the year-to-date
TORONTO, July 13, 2016 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"This quarter marks an exciting milestone in our transformation, as we report the combined results of the new Corus for the first time," said Doug Murphy, President and Chief Executive Officer. "We are pleased with the tremendous progress made by our talented and committed team as they move quickly to realize the benefits of our new scale and maximize cost synergies. Moving forward, our focus will be on the pursuit of revenue and cost synergies, strong execution on integration and advancing our strategic priorities, which will deliver value to our shareholders over the longer term."

(1) Segment
profit,
adjusted
segment
profit,
adjusted net
income
attributable
to
shareholders,
adjusted
basic
earnings per
share, and
free cash
flow do not
have
standardized
meanings
prescribed by
IFRS. The
Company
believes
these non-
IFRS measures
are
frequently
used as key
measures to
evaluate
performance.
For
definitions
and
explanations,
see
discussion
under the Key
Performance
Indicators
section of
the Fiscal
2016 Report
to
Shareholders.

(2) For the three
months ended
May 31, 2016,
adjusted net
income
attributable
to
shareholders
excludes
business
acquisition,
integration
and
restructuring
charges of
$29.3 million
($0.15 per
share) and
debt
refinancing
costs of
$61.2 million
($0.29 per
share). For
the nine
months ended
May 31, 2016,
adjusted net
income
attributable
to
shareholders
represents
net income
attributable
to
shareholders
adjusted to
include
amortization
of disposed
Pay TV
programming
assets of
$15.6 million
($0.11 per
share) and
excludes
business
acquisition,
integration
and
restructuring
charges of
$37.6 million
($0.29 per
share), a
gain on the
disposal of
the Pay TV
disposal
group of
$86.2 million
($0.70 per
share) and
debt
refinancing
costs of
$61.2 million
($0.41 per
share). For
the three
months ended
May 31, 2015,
adjusted net
income
attributable
to
shareholders
excludes
intangible
asset
impairment
charges of
$51.8 million
($0.44 per
share) and
business
acquisition,
integration
and
restructuring
charges of
$2.7 million
($0.02 per
share). For
the nine
months ended
May 31, 2015,
adjusted net
income
attributable
to
shareholders
excludes
radio
broadcast
license and
goodwill
impairment
charges of
$130.0
million
($1.44 per
share),
intangible
asset
impairment
charges of
$51.8 million
($0.44 per
share),
business
acquisition,
integration
and
restructuring
charges of
$10.7 million
($0.09 per
share),
offset by a
gain on
distribution
of investment
of $17.0
million
($0.17 per
share).

Consolidated Results from Operations

Commencing April 1, 2016, 100% of the operating results of Shaw Media Inc. ("Shaw Media"), as well as its assets and liabilities, have been fully consolidated as a business combination which occurred in accordance with IFRS 3 - Business Combinations and, as a result, Shaw Media has been accounted for by applying the acquisition method as of that date. Shaw Media has been reported as part of the Television segment (further discussion is provided in note 17 of the Company's interim condensed consolidated financial statements for the period ended May 31, 2016).

In addition, for fiscal 2016, certain of Corus' Pay Television business' ("Pay TV") assets and liabilities were reclassified as held for disposal effective November 19, 2015 as a consequence of meeting the definition of assets held for sale under IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations. The disposal group, Pay TV, did not qualify for discontinued operations presentation and, as a result, its operating results remain in continuing operations in the consolidated statement of income and comprehensive income for the nine months ended May 31, 2016. However, intangible assets classified as held for disposal ceased being amortized effective November 19, 2015 and as a consequence, amortization of program and film rights in the Television segment for the nine months ended May 31, 2016 is approximately $15.6 million lower than it would have been had amortization on these assets not ceased. On February 29, 2016, the Pay TV disposition was completed and the related proceeds and gain associated with this disposal group were recognized (further discussion is provided in note 17 of the Company's interim condensed consolidated financial statements for the period ended May 31, 2016).

Consolidated revenues for the three months ended May 31, 2016 were $360.8 million, up 78% from $203.1 million last year. Consolidated segment profit was $130.2 million, up 90% from $68.7 million last year. Net loss attributable to shareholders for the quarter was $15.8 million ($0.10 loss per share basic and diluted), as compared to $8.1 million ($0.09 loss per share basic and diluted) last year. Net loss attributable to shareholders for the third quarter of fiscal 2016 includes business acquisition, integration and restructuring costs of $29.3 million ($0.15 per share) and debt refinancing costs of $61.2 million ($0.29 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $53.0 million ($0.34 per share basic) in the quarter. Net loss attributable to shareholders for prior year quarter includes intangible asset impairment charges of $51.8 million ($0.44 per share) and business acquisition, integration and restructuring costs of $2.7 million ($0.02 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $31.6 million (0.36 per share) in the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2016 were $786.8 million, up 27% from $621.7 million last year. Consolidated segment profit was $305.6 million, up 38% from $221.7 million last year, however, excludes amortization of disposed Pay TV program and film rights of $15.6 million. Adjusting for this, segment profit would be $290.0 million, up 31% from last year. Net income attributable to shareholders for the nine months ended May 31, 2016 was $127.8 million ($1.16 per share), compared to a net loss of $43.0 million ($0.50 loss per share) last year. Net income attributable to shareholders for the nine months ended May 31, 2016 includes business acquisition, integration and restructuring costs of $37.6 million ($0.29 per share), debt refinancing costs of $61.2 million ($0.41 per share), a gain relating to the discontinuation of the Pay TV business and the disposal of certain assets of $86.2 million ($0.70 per share), and excludes amortization of disposed of Pay TV program and film rights of $15.6 million ($0.11 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $116.4 million ($1.05 per share basic) for the current year-to-date. Net loss attributable to shareholders for the nine months ended May 31, 2015 includes Radio broadcast license and goodwill impairment charges of $130.0 million ($1.44 per share), intangible asset impairment charges of $51.8 million ($0.44 per share) and business acquisition, integration and restructuring costs of $10.7 million ($0.09 per share), offset by a gain on disposition of investment of $17.0 million ($0.17 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $112.0 million ($1.30 per share) for the prior year-to- date.

-- Segment revenues decreased 2% in Q3 2016 and 3% for the year-to-date
-- Segment profit((1)) increased 2% in Q3 2016 and decreased 3% for the
year-to-date
-- Segment profit margin((1)) of 24% in Q3 2016 and 23% for the
year-to-date

(1) Segment profit, adjusted segment
profit, segment profit margin and
adjusted segment profit margin do
not have standardized meanings
prescribed by IFRS. The Company
reports on these because they are
key measures used to evaluate
performance. For definitions and
explanations, see discussion
under the Key Performance
Indicators section of the 2016
Report to Shareholders.

(2) For the nine months ended May 31,
2016, segment profit has been
adjusted to include amortization
of disposed Pay TV program and
film rights of $15.6 million.

Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three and nine months ended May 31, 2016 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.

A conference call with Corus senior management is scheduled for July 13, 2016 at 9:00 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for local and international callers is 1.416.359.3130 and for North America is 1.800.694.7044. More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Use of Non-IFRS Financial Measures

This press release includes the non-IFRS financial measures of adjusted net income attributable to shareholders, adjusted basic earnings per share and free cash flow that are not in accordance with, nor an alternate to, generally accepted accounting principles ("IFRS") and may be different from non-IFRS measures used by other companies. In addition, these non-IFRS measures are not based on any comprehensive set of accounting rules or principles.

Non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-IFRS financial measures are meant to supplement, and to be viewed in conjunction with, IFRS financial results. A reconciliation of the Company's non-IFRS measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of the words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although Corus believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying such forward-looking statements may be found in our Annual Information Form. Corus cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Corus, investors and other should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

(1) Segment
profit does
not have a
standardized
meaning
prescribed
by IFRS. For
definitions
and
explanations,
see
discussion
under the
Key
Performance
Indicators
section of
the 2015
Report to
Shareholders.